Morgan Stanley Books Archegos loses, but the profit reaches a high level

Morgan Stanley lost $ 911 million when Archegos Capital Management exploded last month, setting a record quarter for the Wall Street firm.

The Bank of New York reported a quarterly profit of $ 4.1 billion, or $ 2.19 per share, on Friday, with revenue of $ 15.7 billion. This exceeded the consensus estimates of analysts surveyed by FactSet with earnings per share of $ 1.72 on revenue of $ 14.1 billion.

Morgan Stanley made big gains from euphoric market conditions in early 2021. But record performance in many of the bank’s businesses was offset by credit and trading losses from a sale of shares worth more than $ 30 billion related to Archegos, the family office run by former Tiger Asia manager Bill Hwang.

More than two-thirds of the banks’ losses on Archegos were related to guarantees that Morgan Stanley sold at lower prices to repay the margin loans that the fund borrowed to increase its holdings in a number small share. The rest of the losses in Archegos came when the bank closed smaller Archegos positions that it did not confiscate to deal with the margin call, chief executive James Gorman said in a conference call with analysts.

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